Distributional Effects of Social Security Reforms: the Case of France

Short summary: 

This paper quantifies the long-run distributional impact of two Social Security reforms: modifying the parameters of a defined benefit (DB) plan (“Ayrault’s reform” in France) and switching to a notional defined contribution (NDC) plan (“Italian reform”). For different reasons, low-skilled workers are the main losers with both reforms. Under Ayrault’s reform they delay retirement by 2 years, while in switching to a NDC scheme their pensions fall substantially. The switch from a DB to a NDC plan yields substantial welfare losses; pensions fall drastically, and individuals save more. Since low-skilled workers do not save as much as medium- or high-skilled workers, this reform leads to a more unequal distribution of assets.

Publication Authors: 
Raquel Fonseca
Thepthida Sopraseuth
Number: 
15-15
Year: 

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